* Spain Q4, 2013 GDP rise highest since 2008-data
* Data supports bonds before Thursday's debt sale
* Belgium slightly outperforms as 10-yr debt orders swell
By Emelia Sithole-Matarise
LONDON, Jan 14 Spanish yields dippped on Tuesday as data showing the country's economy grew at its fastest pace since 2008 in the last quarter of 2013 supported demand ahead of debt sales this week.
Economy Minister Luis de Guindos said late on Monday that the Spanish economy probably grew by about 0.3 percent in the fourth quarter of last year. This was the third quarterly expansion in a row and showed the euro zone's fourth largest economy was recovering more briskly than initially thought.
A glut of debt sales from Spain and Italy this week have tempered sharp falls in the countries' debt yields though analysts expect ample bond repayments to be ploughed back into euro zone paper across the credit spectrum.
Investor orders for a 10-year Belgian bond issue via a syndicate of banks surpassed 9 billion euros on Tuesday, a banker involved in the deal told IFR, a Thomson Reuters financial service.
The European Central Bank's renewed pledge last week to fight further falls in inflation or an unwarranted rise in money market rates has also soothed concerns that tighter monetary conditions could hamper the bloc's recovery.
"The (Spanish) growth data ... confirms the signs that we see from other indicators as well that the economy is heading in the right direction," said Mathias van der Jeugt, a strategist at KBC Securities.
"Obviously it's clear there will be some kind of correction in (Spanish yields) after we tested the 2009 lows on January and ahead of the upcoming supply but there isn't a strong reversal yet. Sentiment in general remains very good towards (peripheral euro zone countries)."
Spanish 10-year yields were last 2 basis points lower on the day at 3.82 percent as the market took a breather after the yields hit four-year lows last week. Equivalent Italian yields were down by a similar amount at 3.88 percent.
Spain aims to raise up to 5.5 billion euros in a debt auction on Thursday after selling an above-target 5.3 billion euros of five- and 15-year bonds last week.
Many in the market expect the sales to go smoothly after Italy sold a hefty 8.2 billion euros of 2016, 2021 and 2028 bonds on Monday, with funding costs over three years falling to a euro lifetime low.
"There has been quite a significant rally which may prompt investors to take a little bit of profit but liquidity is supportive of the auctions," Gianluca Ziglio, head of fixed income research at Sunrise Brokers.
Madrid is hoping to capitalise on improved investor sentiment towards southern European countries to frontload a busy funding programme this year and many in the market expect it to launch a new 10-year benchmark later this month as it seeks to extend the maturity of its debt.
Spain is planning to sell 133.3 billion euros in medium- and long-term bonds this year, up from 128.4 billion in 2013.
Belgian bonds slightly outperformed in the euro zone market as its 10-year debt offer drew strong demand. The bond will be priced later on Tuesday.
Belgian 10-year yields were 3 bps down in the secondary market at 2.44 percent while German yields were unchanged on the day at 1.82 percent, having fallen almost 10 bps since Friday after a weak U.S. non-farm payrolls report cast doubt on the strength of the U.s. recovery.